The Surprisingly Fascinating History of (U.S.) Car Insurance

The world’s first car accident occurred in 1891 (arguably) and involved 2 Ohioans and a tree, but the world’s first car insurance policy wasn’t written until 1897. That means for 6 (doubtlessly crazy) years, people were driving hither and yon in their fancy new horseless carriages without a drop of coverage. Compound that with the fact that safety measures like, oh, stop signs, right-of-way, and driver training had not yet been invented, and you can begin to imagine the chaos of a world sans car insurance.

It’s not like the idea of insurance didn’t exist. As a concept, insurance had begun long, long before then. But perhaps more than anything, the mass production of the automobile in the early 20th century helped to revolutionize the industry — making it as standard today as that requisite new-car smell.

Legends, licensing, and liability

Since cars first started rolling off Ford’s legendary assembly line in 1903, we’ve been driving them, decorating them, sleeping in them, and, yes, crashing them. But while more and more cars were hitting the road, early drivers were hitting trees, wagons, horses, and inevitably, each other as well.

In 1930, roughly 110 people were killed per day in car accidents. In 2000, with nearly twice the national population, fatalities per day increased by only 4 to 114. That’s approximately 10 times more fatalities per registered vehicle back in 1930.

And while this figure is staggering, it’s not altogether surprising if you consider that most drivers in the early days were untested and virtually untrained. Back then, they didn’t have driving schools, driver tests, or driver licensing laws any more than we have hovercar training today. Massachusetts and Missouri were the first to establish driver licensing laws in 1903, but Missouri had no actual driver exam law until 1952.

In the early days, instead of standing in line for 2 hours at the DMV and taking numerous tests just to wait several weeks for your license to arrive, you could simply walk into your local licensing office, plunk down 50 cents (or so), and walk away the proud owner of a drivers license. Almost as easy as getting one from a Cracker JackÃ‚Â® box.

But as we know all too well, simply having a license doesn’t necessarily make you a good driver. And imagine what the roads must have been like at the turn of the last century. The combination of amateur drivers and unpaved, unmonitored roads proved tragic and highlighted the rapidly growing need for liability insurance.

Paul Revere XII’s fairly tame ride

Sadly, the history of car insurance doesn’t have many dramatic revolutionary moments, so we decided to make one up.

After witnessing a devastating pile-up on Route 0 back in 1927, Paul Revere’s great-times-twelve-grandson had an idea so revolutionary, so inspirational, he raced (at top speeds of 50 mph!) to the capital building of Massachusetts in his trusty Chrysler Imperial to spread his message. Unable to resist his passionate and eloquent speech on the innumerable merits of car insurance
(and this next part’s true), Massachusetts soon became the first state to make liability insurance required by law.

(In an interesting and slightly unrelated twist, Paul Revere and the Raiders produced an album called “Midnight Ride” exactly 40 years later. It was a U.S. top 20 hit in 1967.)

By the 1940s, with the end of WWII and a subsequent surge in automobile production, most states had passed similar laws. Today, New Hampshire is the only state in the union without compulsory liability laws. (The whole “Live Free or Die” thing.)

From the Model T to the dot-com

Since Travelers sold the first policy 113 years ago, car insurance has evolved from simple handwritten contracts to the high-tech global industry that it is today. Here at Esurance, we’re happy to be included in the car insurance history books (all best sellers, by the way) as one of the very first to offer car insurance online, back in 1999.

And since it first hit the Web more than a decade ago, car insurance has continued to innovate and improve (and so have we). Now you can get a quote in just a few minutes, TCOB online, see pics of your car as it’s being repaired, and all kinds of other cool stuff that Gilbert J. Loomis, the world’s first policyholder, could scarcely have fathomed.

So what’s next? Virtual insurance agents? Flying-car insurance? Maybe. Whatever it is, we look forward to being at the forefront of the industry as one of the top names in car insurance. (1.21 gigawatts!)

Miss a class?

Check out our previous lessons on the surprisingly colorful history of insurance.

About Heidi Wallis

Heidi brings 8 years’ experience to her role as Esurance’s copywriting manager. As a bona fide lit nerd and sucker for anachronism, she spends her days trying to incorporate Hemingway, Frost, and Shakespeare into car insurance (with varying degrees of success).
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